The Structure Of Ibm Into A Mix Of Centralization And Decentralization

1908 WordsMay 7, 20168 Pages
Gerstner changed the structure of IBM into a mix of centralization and decentralization. Gerstner focused on balancing IBM’s common shared activities (centralization) with highly localized, unique activities (decentralization) (Gerstner, 2002). He cautions a CEO should not go to this third level of integration, the balance of centralization and decentralization, unless it is absolutely necessary because there is “great risk in asking a decentralized unit of an enterprise to be good at its traditional mission and, at the same time, fulfill a shared role in creating value in a new mission” (Gerstner, 2002, pg. 248). I think Gerstner also changed the way IBM was departmentalized, though he doesn’t formally say it. He set out to clearly structure the organization by both function and product. Gerstner made this change by deciding which group in the organization was allowed to dominate. Mintzberg’s framework states there are five basic groups of an organization: operating core, strategic apex, middle line, technostructure, and support staff, and the group that predominates determines the most effective organizational design (Greenburg, 2013). IBM appears to be predominated by the middle line group and therefore should follow the Divisional Structure organization design, which is defined as a set of autonomous units coordinated by a central headquarters (Greenburg, 2013). This was the case at IBM, however groups were divided by geography. Gerstner altered the composition so

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